Word: marketeers
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Dates: during 1960-1969
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Since the market is made up of millions of individual investors, people who try to describe it often talk as if it has a character or personality of its own-which, in effect, it has. The market knows what it likes and what it doesn't like. It prefers higher taxes to tighter money, because the latter tends to draw funds out of stocks into higher-yielding, fixed-income investments-which is what happened late in 1966. When President Johnson-whose every major pronouncement causes the market to react, and often to overreact-called for a surtax early...
During the past year, of course, it took bad judgment, bad timing and bad luck to lose money in the market. The Dow-Jones industrial average of 30 basic blue chips rose 15% in 1967, but the Dow is much too narrow a gauge. Outmoded and inadequate, it does not come close to measuring the total market or its most dynamic companies, even though it has an exaggerated influence over the market's mood. It closed last week at 864-just about where it was three years ago. The better, broader Standard & Poor index...
...rather low P-E ratios to companies with profits that are rising only as fast as the U.S. economy's gross national product. Thus, the Dow-Jones industrials now have P-E ratios averaging less than 17 to 1, down from 21 to 1 just before the 1962 market break. Analysts give much more generous P-Es-50 to 1, or more-to companies with profits that rise faster than the U.S. economy and, most significantly, look as if they will continue...
Contrary to common belief, the market is not enthusiastic about inflation because it tends to erode real profits and bring tight money and Government controls. The market hates the thought of controls on credit, wages and prices. More than anything else, the market abhors uncertainty, even though it is risk, speculation and uncertainty that make markets...
...small investors. Why, for example, when a company announces higher earnings, does its stock so often go down? In their jargon, brokers and analysts say that they have already "discounted" the news-meaning that they anticipated it and "sold on the news." An investor might also think that market averages will fall when other small investors sell more stock than they buy. In fact, markets often go up because professionals figure that small "odd-lotters" overreact and are generally wrong...